CANADIAN CONTEST RULES/PRECEDENTS
Do you need contest rules/precedents
for a Canadian contest?
We offer many types of Canadian contest/sweepstakes law precedents and forms (i.e., Canadian contest/sweepstakes law precedents to run common types of contests in Canada). These include precedents for random draw contests (i.e., where winners are chosen by random draw), skill contests (e.g., essay, photo or other types of contests where entrants submit content that is judged to enter the contest or for additional entries), trip contests and more. Also available are individual Canadian contest/sweepstakes precedents, including short rules (“mini-rules”), long rules, winner releases and a Canadian contest law checklist. For more information or to order, see: Canadian Contest Law Forms/Precedents. If you would like to discuss legal advice in relation to your contest or other promotion, contact us: Contact.
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Guest post by Amy Sullivan Cahill
(Stites & Harbison PLLC, Louisville KY)
False or misleading “likes” or “favourites” have been a topic on my mind recently and one that I have found quite interesting since the recent U.S. Federal Trade Commission’s caution in the Cole Haan Pinterest contest case. In this interesting case, the U.S. FTC raised a question that has been to date mostly been unsettled – namely where the line is between lively participation in a promotion (e.g., “likes”, “pins”, etc.) and deceptive endorsements (i.e., false or misleading and undisclosed endorsements). As such, this recent short note by Amy Cahill caught my eye (reprinted with permission).
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FTC First Shot Across the Bow:
Is Your Social Media Contest Next?
Our 2012 alert, “Like us” On Social Media! An Endorsement Under Advertising Laws? addressed the Federal Trade Commission’s decision on the implication of consumer “Likes” on social media platforms such as Facebook. At that time, the FTC engaged in a common sense interpretation of the consumer impression created by Facebook “Likes” as implying only “general social endorsement” that could be used in marketing by companies without running afoul of false advertising laws, even where the “Likes” were solicited in the context of a “like-gated” contest that requires entrants to “Like” a company as a condition to entry.
In its recent letter directed to upscale shoe retailer Cole Haan, the FTC seemed to narrow its position on the permissibility of social media endorsements, at least in the context of consumer contests that solicit entries through social media postings endorsing particular products. March 20, 2104 Letter, FTC File No. 142-3041.
Cole Haan, the upscale shoe retailer, invited consumers to enter its “Wandering Sole” contest offering a $1,000 shoe shopping spree to winners. Contest rules instructed contestants to create Pinterest boards that included five Cole Haan shoe images along with pictures of five places that contestants would like to roam wearing their favorite shoes.
The FTC wrote, “we believe that participants’ pins featuring Cole Haan products were endorsements of the Cole Haan products.” The FTC went on to suggest that the fact that “pinners” were incentivized to make the postings amounted to a material connection between advertiser and endorser that would not be anticipated by consumers who encountered the postings. Specifically, the hash tag used in the contest #WanderingSole was found inadequate to inform consumers of the material connection.
Nevertheless, the FTC treated the Cole Haan closing letter as a “shot across the bow” and declined to open an enforcement action, in part because the FTC recognized this ruling as a “first’ of its kind. More importantly to businesses (as the FTC letter will be considered a warning to all against similar future conduct), the FTC placed significant emphasis on the fact that Cole Haan had since adopted a social media policy that adequately addresses the FTC’s concerns.
Has your company adopted a social media policy to help insulate against false advertising claims that might arise in connection with online contests? This is an easy and low-cost step that makes more sense than guessing where the new online “endorsement” will be found. A copy of the FTC’s Advertising Guides are available on the FTC web site.
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KEY LEGAL TIPS FOR RUNNING
A PROMOTIONAL CONTEST IN CANADA
The following are some key legal tips for operating a successful and legal contest in Canada:
CRIMINAL CODE
Avoid the illegal lottery offences of the Criminal Code (e.g., include a bona fide “no purchase necessary” entry option and skill element, such as a time-limited, multiple-step mathematical question for potential winners as a condition of awarding prizes).
SHORT RULES (MINI RULES)
Include short rules / mini rules with all of the required Competition Act disclosure requirements for point-of-purchase materials (e.g., print and in-store marketing, social media and Internet sites, packaging and labeling, television and radio spots, etc.).
For more information, see: Canadian Contest Law Forms/Precedents.
LONG RULES (OFFICIAL RULES)
Ensure that precise long rules (i.e., the official contest rules) are included that reflect the details of the contest, anticipate potential contingencies (e.g., technical problems) and set out the terms of the contest as clearly as possible – for example, eligibility requirements, how to enter, prize descriptions, number and value of prizes, draws and award of prizes, odds of winning and indemnifying and releasing the contest sponsor and any co-sponsors or prize sponsors.
Contests are contracts, and so they should be as accurate, clear and precise as possible in the event issues arise.
For more information, see: Canadian Contest Law Forms/Precedents.
WINNER RELEASE FORMS
Consider using winner release forms for contest winners.
While not required by law in Canada, winner release forms are almost always used by contest sponsors to have winners confirm that they have complied with all contest rules and release the sponsor from legal liability. Signing and returning winner releases is also commonly included in contest rules as a condition of awarding a prize.
Winner release forms are particularly important for contests in which there may be higher risk (e.g., where the contest involves high value prizes or a trip prize).
For trip contests, sponsors are generally advised to use winner releases for both winners and any travel companions (and guardian releases for any minor companions).
For more information, see: Canadian Contest Law Forms/Precedents.
FALSE OR MISLEADING ADVERTISING
Ensure that advertising and marketing materials are not false or misleading (i.e., comply with the general civil and criminal misleading advertising sections of the Competition Act, under sections 74.01 and 52).
In this regard, contests in Canada must comply not only with stand-alone contest provisions of the Competition Act (under section 74.06) but also with the general misleading advertising sections of the Competition Act.
It is particularly important to ensure that the marketing materials also match the contest rules and that all material aspects of the contest (e.g., number and type of prizes, prize values, how to enter and win and any conditions/limitations) are accurately described in the short rules, long rules and marketing materials.
CANADIAN FEDERAL ANTI-SPAM LAW (CASL)
Comply with Canada’s federal anti-spam legislation (CASL).
CASL is often relevant when running contests in Canada, including if electronic distribution lists will be used to market the contest, the contest will include the collection of e-mails for marketing unrelated to administration of the contest, if entrants’ e-mail addresses will be shared with third parties (e.g., related entities or affiliate marketers) or entrants are either required or incentivized (e.g., through additional entries) to “share” the contest with friends or family.
Given the potentially severe penalties for violating CASL, which include AMPs of up to CDN $10 million, it is very important for contest sponsors to ensure that they comply with CASL for any electronic marketing related to promotional contests open to Canadians.
For more information about contests and CASL, see: Contests and CASL and CASL Compliance Errors.
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CASL Compliance Checklists and Precedents: For information about the CASL compliance checklists and precedents we offer, see: CASL Compliance Checklists and Precedents.
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INTELLECTUAL PROPERTY CONSENTS
Consider whether consents are needed (and if necessary obtained) to reproduce third-party intellectual property – for example, trade-marks, logos, etc. – or to transfer ownership in contest materials – for example, where contestants create original material as part of the contest.
Contest rules in Canada commonly include rights (e.g., a licence) for the sponsor to use information and content contributed by entrants and if entrants will be contributing original content (e.g., photographs, essays, etc.) it is also a good practice for sponsors to include guidelines relating to their rights to use (or reject) any entrant contributed content.
For more information, see: Guidelines for Consumer Generated Content Contests.
U.S. LEGAL ADVICE IF OPEN IN THE U.S.
Obtain U.S. legal advice if the contest will be open to U.S. residents or limit the contest to only Canadian residents.
SOCIAL MEDIA PLATFORM RULES
Comply with social media sites’ terms of use if using social media to promote or host a contest (e.g., Facebook’s Promotions Rules).
Also ensure that appropriate disclosures are made in all social media marketing (i.e., include short rules).
For more information, see: Contests and Social Media.
OTHER COMPETITION LAW
AND ADVERTISING LAW RULES
Consider whether other competition or advertising law rules may apply to a contest. For example, in addition to the stand-alone contest provision (section 74.06), the Competition Act also contains provisions governing deceptive prize notices, general misleading advertising (sections 52 and 74.01) and telemarketing that involves prizes.
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SERVICES AND CONTACT
I am a Toronto competition/antitrust lawyer and advertising/marketing lawyer who helps clients in Toronto, Canada and the US practically navigate Canada’s advertising and marketing laws and offers Canadian advertising/marketing law services in relation to print, online, new media, social media and e-mail marketing.
My Canadian advertising/marketing law services include advice in relation to: anti-spam legislation (CASL); Competition Bureau complaints; the general misleading advertising provisions of the federal Competition Act; Internet, new media and social media advertising and marketing; promotional contests (sweepstakes); and sales and promotions. I also provide advice relating to specific types of advertising issues, including performance claims, testimonials, disclaimers, drip pricing, astroturfing and native advertising.
For more information about my services, see: services
To contact me about a potential legal matter, see: contact
For more regulatory law updates follow me on Twitter: @CanadaAttorney
